TaxTMI 
TaxTMI 
2013 (2) TMI 579
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....o individuals and organizations in the field of Education, Social Cultural, Finance, Industrial, Medical, Arts and Sports. (3) To collect funds for the various objects of the trusts to issue publications, to hold seminars/debates etc. (4) To chalk out programmes for organizing the groups of people of progressive thoughts for all out development of Indian, especially rural people. (5) To arrange cultural programmes, to issue souvenirs etc. to collect the funds for implementing the programmes of the trust. (6) To give financial help to needy persons for medical, educational and religious purposes. (7) To create organizations for rural development and for agricultural development and to help them. 2.1 The Trust was entitled to exemption u/s.11 of the I.T. Act. A search and seizure action was conducted on 20-07-2005 in the case of Sri Ramachandra Dada Shinde at his office premises at Bharati Vidya Bhavan as well as at his residence at "Ashirwad", Bharti Nagar, Paud Road, Kothrud. Sri Ramachandra Dada Shinde is the trusted employee of Bharati Vidyapeeth, Pune and is also work....
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....s did not bear the name and address of the donor from whom the donation is claimed to have been received by the trust. The same did not even bear the signature of the person who has collected the donation on behalf of the trust nor any date is available on the said coupon. He, therefore, came to the conclusion that in absence of signature of the receiver and in absence of full details of the donor etc. verification of the same is not possible. The AO further noted that not only the assessee trust but the various other trusts of the group have also received similar donations running into lakhs of rupees from different villagers in rural areas in the similar manner by way of unnamed, unsigned coupon collection of small donations. He further noted that there is some difference between the collection of donation as submitted by the assessee and the entries appearing in the books of account. In view of all these defects, the AO held the donations through coupons and credited to development fund as not genuine. 4.2 The AO further noted that the donors who have given donation through coupons are neither aware of the nature nor the purpose of donation claimed in their names, therefore, ....
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....bay High court in the case of CIT Vs. State Bank of India reported in 169 ITR 298 held that the assessee is not entitled to any benefit of deduction u/s.11 and 12 of the Income Tax Act. 4.4 The AO further noted from the balance sheet of the assessee trust that the assessee has defaulted in application of the accumulated fund strictly in accordance with the provisions contained in the Income Tax Act. He noted that the assessee has invested the surplus fund in violation of section 11(2) r.w. 11(5), the details of which are as under : Assessment Year Nature of violation 99-2000 * Deposit with Bharati Vidyapith Rs. 55,00,000/- 2001-02 * Investment in shares Rs. 1,00,000 * Deposit with Bharati Vidyapith Rs. 55,00,000 2002-03 * Investment in shares Rs. 3,10,000/- * Deposit with Bharati Vidyapith Rs. 55,00,000/- 2003-04 * Investment in shares Rs. 5,00,000/- * Deposit with Bharati Vidyapith Rs. 55,00,000/- 2004-05 * Investment in shares Rs. 5,00,000/- * Deposit with Bharati Vidyapith Rs. 55,00,000/- 2005-06 * Investment in shares Rs. 5,00,000/- * Deposit with Bharati Vidyapith Rs. 55,00,000/- * Deposit with So....
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....led donors and therefore the burden of proof entirely lies on the assessee and the same cannot be shifted on the department. This amounts therefore becomes taxable in the hands of the assessee. (2) Without conceding the above point the said collection cannot fall under the provisions of section 11(d) of the IT act 1961 which deal with the voluntary donations specifically for the purpose of corpus. No proof of any kind has come before me to categories the above donations as those falling under the provisions of section 11(d) of IT Act 1961. (3) The belated Form No.10 filed before me cannot be entertained for the reasons explained above and therefore the accumulated amount is required to be brought to tax. (4) The amount spent by the assessee trust during the year under consideration does not go to prove that the assessee is really engaged in the charitable activities and therefore in view of the decision of Hon'ble Bombay High Court discussed above the assessee is not entitled even for exemption of income to the extent of 25% as envisages u/s.11(1)(a) of the IT Act 1961. (5) Finally by investing the funds in the modes other than those mentioned in....
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....the Tribunal in the case of Prabodhan Prakashan Vs. ADIT reported in 50 ITD 135 and the decision of the Chennai Bench of the Tribunal in the case of N.A. Ramachandra Raja Charity trust Vs. Ist ITO reported in 14 ITD 330 he upheld the finding of the AO that the donations shown in the statement of account of the assessee received through issue of coupons is taxable being revenue receipts. He accordingly held that donations received through issue of coupons are revenue receipts and taxable as income of the trust and cannot be considered as exempt u/s.11(1)(2) of the Income Tax Act. 6. So far as the action of the AO in disallowing the deduction on account of accumulation of income u/s.11(2) r.w. 11(5) for non filing of Form No.10 he upheld the same by relying on various decisions. Rejecting the submission of the assessee that donations received through issue of coupons are corpus donation and there is no requirement in the section that in the resolution for accumulation, specific purposes should be mentioned and that Form No.10 can be submitted during assessment proceedings the learned CIT(A) relied on various decisions and held that since donations are not genuine, therefore, they ....
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....f income of the trust for the period relevant to A.Y. 1999-00 in the form of accumulation to be applied for the objects of the trust. He came to the conclusion that the resolution dated 03-05-2007 was not a resolution in accordance with the provisions of section 11(2) and Form No.10 under Rule 17 of I.T. Rules for A.Y. 1999-00. He accordingly upheld the action of the AO in holding that the resolution for accumulation of funds passed by the trustees was not a valid resolution for the purpose of section 11(2) r.w.s.11(5) since it was not passed at the time of finalisation of accounts of the relevant period or at the time when decision regarding appropriation of surplus income of the relevant period was taken. He also rejected the submission of the assessee that in view of the treatment given to the donations through coupons by its corpus donations, it did not have the occasion to file Form No.10 and the moment it came to know that these donations are to be treated as its income, it filed Form No.10. 7. The learned CIT(A) further held that since the assessee trust has purchased shares of Krishna Verala Sahakari Soot Girni Ltd. & Sagareshwar Sahakari Soot Girni Ltd which the same ha....
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....was no reason to tax the said donations as income of the trust. 3. The learned CIT(A) erred in holding that the assessee trust was not entitled to claim exemption u/s.11 on the ground that the Form No. 10 was not filed by the assessee along with the return of income. 3.1 The learned CIT(A) erred in holding that Form No.10 filed by the assessee was not valid since it was accompanied by a resolution dated 03-05-2006 for application of the income and he held that the resolution should have been passed by the appellant before the date for filing the return for the relevant year. 3.2 The learned CIT(A) further erred in holding that the assessee trust was not permitted to file Form No.10 in the reassessment proceedings u/s.147 or 153C and hence, the Form No.10 filed by the assessee in the reassessment proceedings was not as per law and the learned AO had rightly denied the exemption to the assessee trust. 3.3 The learned CIT(A) erred in holding that the decision of Supreme Court in the case of Nagpur Hotel Owners' Association [247 ITR 201] was not applicable to the facts of the present case and hence, the exemption u/s.11 was rightly denied by the AO o....
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....investments/deposits. (b) The shares of the said society did not yield any dividend to the appellant trust right from the day of investment and this would also indicate that they were not investments made with an intention to earn any income therefrom. (c) Overall investment of the assessee trust and other trusts of the group was very meagre and the investment was not made in order to gain the control over the organisation. (d) In the assessments completed u/s.143(3) prior to the search in the cases of other trusts of the same group, the department did not raise any objection on this issue and had granted the exemption u/s.11. 4.3 Accordingly, the learned CIT(A) was not justified in holding that the appellant trust had made any investments in violation of section 13(1)(d) r.w.s. 11(5). 4.4 Without prejudice to the above Grounds, the learned CIT(A) ought to have taxed only the income arising from investments made in violation of section 11(5) and not the entire income of the assessee trust. 5. The learned CIT(A) erred in holding that the loan given to Sonhira Sakhar Karkhana (a cooperative society) amounting to Rs. 1,25,00,000/- ....
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....e in the grounds has challenged the order of the CIT(A) in holding that the assessee has not violated the provisions of section 13(1)(d) on account of Rs. 55,00,000/- given to Bharati Vidyapeeth and shown in the Balance sheet as deposit for building construction under the head 'investment'. 9.1 As already stated earlier the AO during the course of assessment proceedings noted that the assessee under the head 'investment' had shown an amount of Rs. 55 lakhs as "deposit for building construction". The said deposit was with Bharati Vidyapeeth. According to the AO the assessee, by giving the amount of Rs. 55 lakhs to Bharati Vidyapeeth, has violated the provisions of section 13(1)(d). He rejected the contention of the assessee that it has received interest on this deposit and therefore provisions of section 13 do not attract. He held that by giving the loan to Bharati Vidyapeeth the assessee has violated the provisions of section 13(1)(d). 9.2 In appeal the learned CIT(A) following his order for A.Y. 99-00, which has been followed in A.Y. 2005-06, held that the amount of Rs. 55 lakhs given by the assessee to Bharati Vidyapeeth was a loan and was not an investment or a deposit and....
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....e is no infringement of provisions of section 13(1)(d) r.w.section 11(5). He also relied on the following decisions for the above proposition. i. National Engg. Coordination Committee vs. ACIT 43 ITD 612 (Pune) ii. DIT Vs. ACME Educational Society 326 ITR 146 (Delhi High Court) iii. Kanpur Subhash Shiksha Samiti Vs. DCIT 11 ITR 23 (Lucknow) iv. Sarladevi Sarabhai Trust 172 ITR 698 (Gujarat High Court) v. Vidya Pratisthan Vs. DCIT 133 TTJ (Pune) 472 9.5 We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the assessee trust had given loan to Bharati Vidyapeeth amounting to Rs. 55 lakhs which is being shown in the balance sheet since 1993-94 onwards as deposit for building construction under the head "investment". There is also no dispute to the fact that Bharati Vidyapeeth is also a charitable trust and basically engaged in the field of education. There is also no dispu....
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..... This view was held by Delhi ITAT in the case of Alarippu (60 ITD 478). This decision of ITAT was confirmed by Delhi High Court in 244 ITR 358. In the judgment in 244 ITR 358 Hon'ble Delhi High Court pointed out that the words 'Investment', 'Deposit' and 'Loan' have different meaning. Relevant portion of the judgment is reproduced below : "The expressions used in both the provisions quoted above, are 'investment' and 'deposit'. The former expression means to layout money in business with a view to obtain an income or profit. Deposit, on the other hand, means that which is placed anywhere, as in any one's hands for safe-keeping, something entrusted to the care of another. These two expressions have been used in a cognate sense and have to be understood as such. In order to constitute an investment the amount laid down should be capable of any result of any income, return or profit to the investor and in every case of investment, the intention and positive act on the part of the investor should be to earn such income, returns, profit in order to constitute an investment, the monies shall be laid out in such a manner as to acquire some species of property which would....
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....ven by the appellant to the Bharati Vidyapeeth was neither an 'investment' nor a 'deposit'. Therefore, there is no violation of provision of section 11(5) by the appellant by giving loan to Bharati Vidyapeeth amounting to Fts.55 lakhs. Therefore, grounds of appeal No.9, 9.1 & 9.2 are allowed. However, this allowance is subject to the observation given in para 5.7. 9.8 We find the Hon'ble Delhi High Court in the case of DIT Vs. ACME Educational Society reported in 326 ITR 146 has observed as under : "10. Having heard both the parties at length, we are of the view that the issue that arises for consideration in the present case is whether advancing of an interest-free temporary loan by one society to another society having similar objects is an "investment" or a "deposit" and whether the assessee-society had violated the provisions of s. 13(1)(d)r/w s. 11(5) of Act, 1961 ? 11. Secs. 11(5) and 13(1)(d) of the Act, 1961 are reproduced hereinbelow : "1 1. Income from property held for charitable or religious purposes ........ .. (5) The forms and modes of investing or depositing the money referred to in cl. (b) of subs. (2) shall be the following, namely : ....
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....d by a financial corporation which is engaged in providing long-term finance for industrial development in India and which is (eligible for deduction under) cl. (iii) of sub-s. (1) of s. 36; (ix) deposits with or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing longterm finance for construction or purchase of houses in India for residential purposes and which is (eligible for deduction wider) cl. (viii) of sub-s. (1) of s. 36; (ixa) deposits with or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing longterm finance for urban infrastructure in India. Explanation : For the purposes of this clause,- (a) 'long-term finance' means any loan or advance where the terms under which moneys are loaned or advanced provide for repayment along with interest thereof during a period of not less than five years; (b) 'public company' shall have the meaning assigned to it in s. 3 of the Companies Act, 1956 (1 of 1956); (c) 'urban infrastructur....
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....13(1)(d) as amended by the Finance Act, 1983, provides that the income of any charitable or religious trust or institution will not be entitled to exemption under ss. 11 and 12, if certain conditions stipulated therein are not complied with. The word deposit does not cover transaction of loan which can be more appropriately described as directed bailment. The essence of deposit is that there must be a liability to return it to the party by whom or on whose behalf has been made on fulfilment of certain conditions. In the commercial sense, the term is used to indicate the aforesaid transaction as deposit of money for employment, in business, deposits for value to initiate security for deposit of title deeds, similar documents as security for loan, deposit of money bills in a bank in the ordinary course of business of current account and deposits of a sum at interest at a fixed deposit in a bank." 13. In Baidya Nath Plastic Industries (P) Ltd. & Ors. vs. K.L. Anand, ITO (1998) 146 CTR (Del) 421 : (1998) 230 ITR 522 (Del) a learned Single Judge of this Court pointed out that the distinction between "loan" and "deposit" is that in the case of the former it is ordinarily the dut....
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....iting the money referred to in cl. (b) of sub-s. (2) of s. 11. Sec. 11(2)(b) refers to the money so accumulated or set apart is invested or deposited in the forms or modes specified in sub-s. (5), and it required that such money should be invested or deposited in the forms or modes prescribed under s. 11(5). The question that arose is, whether the money advanced to ACIL is part of the money "applied". The question of its investment under s. 11(5) will not arise. It is therefore, necessary first to see what is the amount that was "applied". Both the Asstt. CIT and the CIT and the CIT(A) have equated the word "applied" to "spend". The CIT(A) in para 32 of his order states that the amount advanced to ACIL cannot be considered as an application of the assessee's income. He states that the amounts have not gone out irretrievably and, therefore, it cannot be considered as an expenditure and hence there is no application of money. This approach of the CIT(A) regarding the application of income is erroneous and not keeping with the decided cases cited by the assessee's representative and even the Board's circular No. 100 dt. 29th Jan., 1973. If the interpretation of the CIT was correct the....
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....ACIL. We find that the assessee does not hold any share in this concern. 64. We also find that the NECC is the division of ACIL for the purpose of carrying on its activities. There is no allegation or suggestions made even by the Department that the advances which were made by the NECC were for ulterior motive. We therefore, hold that the amounts advanced to ACIL constituted monies applied by the NECC to its charitable object and activities. Further the minutes of NABARD meeting wherein the said proposal to carry out the market operations was discussed and contains considerable light on the matter which makes it clear that by establishing ACIL and by carrying on regular operations the interest of poultry industries as a whole would be correctly protected. We also agree with the assessee's submissions, which were very fairly accepted by the learned Departmental Representative, that the provisions of s. 11(5) r/w s. 13(1)(d) have no application at all whereas monies or income of the trust have already been applied to the charitable objects of the trust. Consequently, the mischief of s. 13(1)(d) is not attracted to the present case for that reason alone. It was also contended....
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....nd advances made in the asst. yr. 1988-89 also stand on the same footing. The question of contravention of s. 11(5) r/w s. 13(1)(d) does not arise and there would be no question of withdrawing the exemption under s. 11 and sub-section of income to the maximum marginal rate also does not arise. Incidentally, we may observe that the Asstt. CIT was not justified in applying the maximum marginal rate to the gross receipts. Even though exemption under s. 11 was not available, it does not mean that the income of the assessee-trust became equal to that of gross receipts. The income of the assessee in that case should have been computed in a commercial sense, i.e., after allowing all the expenses that were laid out for the purposes of activities. If the entire activity of the assessee was business income then the Asstt. CIT should have applied the maximum rate to the business income separately computed by him and not to the gross receipts. These observations are only incidental and they would arise only if there was any justification for applying the maximum rate at all. 66. For the reasons given above, we hold that the assessee was entitled to claim exemption under s. 11 for all ....
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.....14 Since in the instant case the assessee trust had advanced loan of Rs. 55 lakhs to Bharati Vidyapeeth, another charitable trust also engaged in educational activity, therefore, in view of the decisions cited above, we hold that granting of such loan by the assessee trust to another trust is neither a deposit nor an investment and therefore there is no violation of provisions of section 13(1)(d) of the I.T. Act. In this view of the matter and in view of the detailed discussion by the learned CIT(A) we find no infirmity in his order. Accordingly, we uphold the order of the learned CIT(A) on this issue. Grounds raised by the revenue are accordingly dismissed. ITA No.289/PN/2011 (By Assessee) : 10. The learned counsel for the assessee did not press Grounds of appeal No. 1, 8 and 10 being general in nature for which the learned DR has no objection. Accordingly, these grounds are dismissed as not pressed. 11. Grounds of appeal Nos. 3 to 3.6 by the assessee relate to denial of exemption u/s.11 on account of belated filing of Form No.10 by the assessee trust. 11.1 The learned counsel for the assessee submitted that the AO rejected the Form No.10 and thereby the accumulation ....
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.... by the rule making authority was invalid and also contrary to various judgments. 11.4 Referring to the decision of the Tribunal in the case of Shri Mahakali Mandir Prabandh Samiti reported in 131 TTJ 66 he submitted that Form No.10 was accepted during the reassessment proceedings. 11.5 Referring to the decision of the Delhi Bench of the Tribunal in the case of Manav Bharti Child Institute & Child Psychology reported in 20 SOT 517 (Delhi) he submitted that Form No.10 can be filed at any time during the pendency of the assessment proceedings. He submitted that the learned CIT(A) did not consider the ratio laid down by Hon'ble Supreme Court in the case of Nagpur Hotel Owner's Association (247 ITR 201) according to which From No.10 can be filed at any time before the completion of assessment. He accordingly submitted that the revenue authorities are not justified in denying the benefits of section 11 for late filing of Form No. 10. 11.6 The learned DR on the other hand heavily relied on the orders of the AO and the CIT(A). He submitted that the learned CIT(A) has exhaustively discussed as to why the belated filing of Form No.10 should not be entertained. Therefore, the same b....
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.... possible for the assessing authority to give the assessee the benefit of such exclusion and once the assessment is so completed, in our opinion, it would be futile to find fault with the assessing authority for having included such income in the assessable income of the assessee. Therefore, even assuming that there is no valid limitation prescribed under the Act and the Rules even then, in our opinion, it is reasonable to presume that the intimation required under section 11 has to be furnished before the assessing authority completes the concerned assessment because such requirement is mandatory and without the particulars of this income, the assessing authority cannot entertain the claim of the assessee under section 11 of the Act, therefore, compliance with the requirement of the Act will have to be any time before the assessment proceedings." 12.2 We find the Delhi 'F' Bench of the Tribunal in the case of Additional Director of Income Tax (Exemption) Vs. Manav Bharati Child Institute & Child Psychology reported in 20 SOT 517 (Delhi) has observed as under : "4. As regards cross-objection by assessee, it is submitted that the assessee was claiming exemption under s.1....
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....sion of Hon'ble Gujarat High Court in the case of ACIT Vs. Stock Exchange of Ahmadabad wherein the Hon'ble High Court, after considering the decision of Hon'ble Supreme Court in the case of Nagpur Hotel Owner's Association (Supra) has held that the assessee by filing Form No.10 along with revised return and before completion of assessment has duly complied with requirements of section 11(2) and was therefore entitled to benefit of section 11. The relevant observation of Hon'ble High Court reads as under" "8. From the facts and contentions noted hereinabove, the sole question that arises for consideration is whether the Tribunal was justified in holding that the time limit prescribed for filing Form No.10 under rule 17 of the Rules read with section 11(2) of the Act is directory. In the present case, it is an admitted position that the assessee had filed Form No.10 as required under rule 17 of the Rules alongwith the revised returns filed in respect of all the assessment years under consideration. Thus, admittedly, the forms had been submitted before the assessment came to be completed. At this juncture reference may be made to the decision of the Supreme Court in the case ....
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....t erred in answering the first question in favour of the assessee is correct, and we reverse that finding and answer the said question in the negative and against the assessee." 9. Examining the facts of the present case in the light of the principles enunciated in the above decision, as noticed earlier, the assessee filed Form No.10 under rule 17 of the Rules at the time of filing revised returns in respect of each of the assessment years under consideration. Thus, evidently, the requirements of section 11(2) of the Act had been complied with before the completion of the assessments. Therefore, while completing the assessments for the assessment years under consideration, the Assessing Officer had the necessary information in respect of the claim for exemption under section 11 of the Act made by the assessee before him. Thus, this is not a case where information in respect of the claim of the assessee for giving benefit of section 11 of the Act was furnished after the assessments for the relevant assessment years were completed. Under the circumstances, the present case is squarely covered by the aforesaid decision of the Supreme Court. The assessee was, therefore, entitl....
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....s the same appeared in the balance sheet of the assessee. The learned counsel for the assessee submitted that the assessee trust had purchased the shares of these two cooperative societies which are running textile mills in Sangli District of Maharastra. By purchasing the shares of the 2 cooperative societies the assessee has helped the societies in establishing the factories and therefore this expenditure is not in the nature of an investment but is an expenditure on the objects of the trust. He further submitted that the purchase of shares of the cooperatives societies in substance cannot be said to be investment made by the assessee but was an application of income towards achieving the objectives of the assessee trust. It did not get any controlling interest in these societies since assessee's share capital in both the societies is not even 1% of the total capital and the majority holding is by the Government of Maharastra. Further, these are the shares of the cooperative societies and not of any Private Ltd. or Public Ltd. Company. He submitted that the principle behind floating the cooperatives is to set up a venture for the benefit of the members in general and not for any i....
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....dation. As we have clarified the assessee came to notice the objection of the dept. only during the asst. proceedings and never in the past. Accordingly, after noticing the objection of the A.O. in the asst. the assessee has liquidated these shares and accordingly, thereafter has got over the alleged objection of violation of provisions of section 11(5) by the A.O. The assessee relies upon the decision in the case of Agrim Charan Foundation [253 ITR 593 (Del.)] wherein the assessee had kept deposits with two concerns in violation of section 11(5). However, the same were withdrawn when the A.O. had pointed out the default committed by the assessee. H.C. held that the assessee was entitled to exemption u/s.11 and upheld the order of Tribunal. It is submitted that in our case also, on the same lines, it be held that there is no violation of the provisions of section 11(5) by the appellant trust. In fact, the dept. had accepted in the case of Bharati Vidyapeeth Medical Foundation that the purchase of shares was not in violation of section 11(5). Thus, following the decision of Delhi H.C. we submit that assuming without admitting that the shares purchased by the assessee were i....
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....eshwar Sahakari Soot Girni Ltd. We find the AO was of the opinion that due to purchase of the shares of the 2 cooperative societies there is violation of provisions of section 13(1)(d) r.w.s.11(5) and therefore the assessee trust is not entitled to exemption u/s.11. We find the learned CIT(A) has upheld the action of the AO. It is the submission of the learned counsel for the assessee that the purchase of shares of these cooperative societies cannot be said to be investment made by the assessee since the total shareholding in the capital of the cooperative societies is hardly 1% and the majority of the shareholding is by the Government of Maharastra. Further, the assessee has not received any interest and considering the corpus funds of the trust at 4.26 Crores the investment of 4 lakhs in the shares of these two cooperative societies cannot be treated as an investment. It is also the submission of the learned counsel for the assessee that there was no objection by the revenue in the past and only during the assessment proceedings for 1999-2000 to 2006-07 that the revenue has raised objections. It is also the submission of the learned counsel for the assessee that on being pointed ....
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....th these two concerns. An advice was sought for from a chartered accountant, who advised that the deposits could be kept with these two concerns and exemption under sections 11 and 12 would be available. However, when, at the time of assessment, the Assessing Officer pointed out to the chairman of the trust that these two concerns did not have necessary approval from the Government to accept deposits from charitable trusts, the assessee immediately withdrew the deposits from these two concerns. However, exemption was denied on the ground that there was violation of the provisions. The Tribunal noted that this was a case where the two concerns may have flouted the Government rules and the assessee in the absence of any mala fides and being not linked with the concerns, should not be benefits. The Tribunal, keeping in view the objects for which section 11(5) has been enacted and the factual background, more particularly, the mention made in the forms of the two concerns, and the act of the assessee in immediately withdrawing the amounts on being made aware that the two concerns were not permitted to receive deposits, allowed the assessee's appeal. 4. Learned counsel for the ....
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.... which is running a sugar factory in Sangli District. He submitted that the society has requested the assessee trust to provide a financial help in establishing and running of the sugar factory and thereby lending a hand in overall social development of the area. By giving the loan to the society after obtaining necessary permission from the charity commissioner, the assessee has helped the society in establishing the factories and therefore this expenditure is not in the nature of an investment but is an expenditure on the objects of the trust. Therefore, the learned CIT(A) was not justified in upholding the order of the AO that the same is an investment and is violation of provisions of section 11(5). He submitted that the assessee has charged interest on the loan given to the society. Further, the loan is given to a co-operative society and not to any company or to any concern of the trustees. He submitted that provisions of section 13(2)(1) allows loan to be given to the Trustees or his concern with adequate interest & security. The only prohibition is that the loan should not be given to the trustees or his concern without interest or security. Therefore, there is no bar in se....
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.... the case of the assessee that loan to Sonhira Sahakari Sakhar Karkhana is not an investment or deposit, that the trust has charged interest on the loan, that the trustees are not interested in the co-operative society and that there is no prohibition in giving loan by the trust to the co-operative society when it has earned interest and got adequate security. 16.1 In the preceeding paragraphs (Para 9.4 t 9.14) while deciding the appeal filed by the Revenue we have exhaustively discussed the issue and held that a loan is neither an investment nor a deposit in the nature of an investment and therefore there is no violation of provisions of section 11(5) r.w.s.13(1)(d). Following the same ratio we hold that the assessee trust, by giving loan of Rs. 1,25,00,000/- to Sonhira Sahakari Sakhar Karkhana, has not violated the provisions of section 11(5) r.w.s.13(1)(d). We, therefore, set aside the order of the CIT(A) on this issue and the grounds by the assessee are allowed. 17. In Grounds of appeal Nos. 2 to 2.2 the assessee has challenged the order of the CIT(A) in treating the donations received through issue of coupons as income u/s.68 as against towards corpus of the trust as cla....